Ferrous scrap market to witness an ‘all-out trade war’?

‘Over the last couple of weeks, we have seen a gradual cooling in prices as Turkey has stepped back, buying at lower levels with the pressure on finished product prices,’ comments ferrous metals expert Tom Bird in the latest BIR Mirror update. Low residual scrap has remained ‘particularly strong’ over recent weeks with healthy demand and shortness of supply, he observes.

Generally speaking, demand for shredded ferrous scrap has followed suit, with a wider than normal premium for shredded over HMS grades. ‘However, macro-economic factors continue to play an important part in our industry and the last few months have clearly demonstrated this,’ Bird notes.

Escalating sanctions

Regarding the US/China ‘trade war’, he remarks the figures are ‘staggering’. China and the USA account for US$ 1.4 trillion of the US$ 2.3 trillion estimated to be wiped off global trade. Bird regrets to report that the two nations have not resolved their differences yet. In fact, it seems that tariffs and sanctions are ‘escalating’. The ferrous specialist argues: ‘We are approaching a point of no return for an all-out trade war.’

Regulatory issues in China are also on the increase, with the effects on Zorba shipments from the USA having a significant impact on our shredders. ‘In addition to the much stricter inspection protocols, we have the added pressure of tariffs on our products in retaliation for measures imposed by the USA,’ Bird points out.

This all adds up to a challenging environment for metals stakeholders. ‘Prices of raw materials for our shredders need to reflect the impact of much lower Zorba prices,’ it is underlined.

An interesting summer…

Regarding steel and aluminium product exports to the USA, it was previously considered likely that the EU would receive a similar deal to that of Brazil. However, the EU and the USA’s closest neighbour Canada have been hit with ‘stringent’ tariffs.

‘The summer months should be interesting and we will hopefully gain more clarity on the direction and magnitude of global trade issues. Demand for our ferrous scrap should remain strong and it is important we maintain a healthy steel sector,’ so Bird concludes in his BIR analysis.